Interactive Investor

Insider: buying amid excitement at Covid antibody test firm

19th July 2021 09:27

Graeme Evans from interactive investor

There’s activity at both an AIM-listed company involved in a new finger-stick blood test for Covid, and a former dividend darling.  

A £10,000 shares purchase by the chairman of NetScientific (LSE:NSCI) has kept the life sciences firm in the spotlight following a potentially significant Covid-19 licensing deal with AstraZeneca (LSE:AZN).

Shares in the former Neil Woodford-backed company doubled in value last month after its fully-owned ProAxsis subsidiary was handed responsibility for validation and commercialisation of a finger-stick blood test developed by Astra.

The AIM-traded company then held an oversubscribed shares placing through which it raised £7.7 million to strengthen its balance sheet and increase support for its enlarged investment portfolio of 17 companies covering life sciences, healthcare and technology in the US and UK.

Executive chairman John Clarkson took part in last month's placing at a price of 130p before purchasing shares on Thursday at a price of 101p, taking his stake to 0.65% overall.

The shares had spiked above 200p on the back of the ProAxsis partnership, which NetScientific's chief executive and biggest shareholder Ilian Iliev said could attract a substantial market.

The highly sensitive blood test is well suited to large scale deployment and has the potential to play an important role in antibody analyses in major populations. ProAxsis, a commercial-stage diagnostics company, was formed out of Queen's University Belfast in 2013 and has been fully owned by NetScientific since it bought out the founders in October.

The other subsidiaries are EMV Capital, which is NetScientific's corporate finance and venture capital arm, and liver cancer diagnostics business Glycotest through a 51% stake. Its investment portfolio also spans stakes in Nasdaq-listed immunocology firm PDS Biotechnology and the wearable diagnostics firm G-Tech Medical.

NetScientific shares closed the week at 105p, having gained 5% on Friday following disclosure of Clarkson’s purchase. The company listed on AIM in 2013 after a placing at 160p, but shares were just 12.5p in early 2020 amid upheaval over the stake of Woodford Investment Management.

A far-reaching strategy review identified the need for a larger investment portfolio featuring varying time horizons and stages of development, while the management team was strengthened with the arrival of Clarkson and Iliev.

Further investment in R&D at Glycotest and ProAxsis has meant the group made a loss of £2.3 million in 2020, but the figure was half the level of the previous year.

Recent forecasts by house broker WH Ireland point to break-even by 2023 and a fair value for the shares of 162p. It added that the success of the recent placing further highlighted the momentum under a rejuvenated strategy and strengthened management team.

N Brown’s new FD still stake building

The purchase of £20,000 N Brown (LSE:BWNG) shares by its finance boss Rachel Izzard comes with the clothing and footwear online retailer trading near its lowest level since November.

The recent struggles for the share price come despite chief executive Steve Johnson providing more evidence last month that the strategic transformation undertaken over the past two years is starting to deliver product revenues growth.

The figure rose 4.6% to £106.9 million in the first quarter of the year and is on track to improve by between 3% and 7% over the year as a whole. Further initiatives include a new partnership with Amanda Holden and Davina McCall to be the faces of JD Williams, which is one of the company's strategic brands alongside Simply Be, Jacamo and Ambrose Wilson.

Izzard joined the company in June last year on a salary of £350,000, having been chief financial officer at airline Aer Lingus since 2015. Her first purchase of company shares came in November with an investment worth £35,000, but this is down 18% or £6,300.

Izzard's latest purchase was made at 53p on Friday as she sets about meeting a company requirement to hold shares equal in value to 200% of her base salary. Shares closed the week at 50p, having recovered from 10p in April 2020 to 80p at the start of this year. 

N Brown dates back to 1859 when it was founded by Manchester entrepreneur James David Williams, who pioneered catalogue mail-order shopping. It is still based in the city and employs 1,800 people across the country.

N Brown's dividend is currently on hold, having also been the subject of a hefty cut in 2019 when the yield was 9%. It plans to consider a resumption at the end of the 2022 financial year, when it expects that net debt will be in the range of £280 million and £300 million.

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